A report by the Independent Commission for Aid Impact (ICAI), an independent watchdog set up to scrutinise the UK government's aid spending, has raised concerns about the financial management of British development projects in Afghanistan.

The UK's planned annual expenditure on bilateral aid to Afghanistan from 2011 to 2015 is £178m, with the money allocated to four areas: governance and security, education, wealth creation and humanitarian assistance. In carrying out its review, ICAI focused on 10 programmes deemed to be broadly representative of the Department for International Development's (DfID) aid portfolio in the country.

The report (pdf) gave the Afghanistan aid programme an amber-red mark, signifying that the scheme is "not performing well" and needs "significant improvements". It found that while programme objectives are clear, DfID's risk assessments – particularly in relation to the ability of project partners and managing agents to deliver on time and to budget – fail to meet expectations.

The study criticised DfID's financial management measures, which it said left open the possibility that aid would fail to reach its intended beneficiaries, and suggested the department is "not proactive enough in detecting fraud and corruption".

"We acknowledge that DfID has to manage this programme in an extremely complex and challenging environment," said ICAI chief commissioner Graham Ward. "Our view, however, is that DfID does not give sufficient importance to identifying and managing risks in the design and delivery of programmes in Afghanistan."

The report, entitled The Department for International Development: Programme Controls and Assurance in Afghanistan, makes four recommendations. It says DfID's funding decisions should be informed by a clear understanding of the balance between the risk of leakage and potential programme benefits. The authors also call for: the deployment of staff with stronger financial and procurement skills; more effective liaison between DfID and those delivering the projects; and the implementation, by DfID's Afghanistan office, of National Audit Office (pdf) and public accounts committee recommendations (pdf) on fraud and corruption (pdf).

"UK support in Afghanistan is playing a key role in improving the lives of people who remain amongst the poorest in the world, helping to get children into school and improving healthcare," said UK development secretary Andrew Mitchell. "We accept that in such a challenging environment there are always things we can do better."

The report, published on Thursday, comes at a time when the tension between domestic austerity measures and foreign aid spending is the subject of close scrutiny. It is likely to provide a focal point for further debate about UK aid only a month after Mitchell was forced to defend British aid commitments to India in a speech at Chatham House.

The simultaneous publication of two further ICAI reports will do little to allay government unease about the potential public backlash caused by aid spending.

A review entitled Girl Hub: a DfID and Nike Foundation Initiative concludes that a programme designed to give adolescent girls a firmer footing on the development agenda has had little measurable impact to date. Suggesting that the project has been undermined by "shortcomings in planning and governance", the ICAI identifies a need to improve the scheme's risk, governance and financial management measures, urging a fresh assessment of its sustainability.

A third report, focusing on the effectiveness of DfID's engagement with the World Bank, acknowledges the efficacy of the relationship between the two bodies while highlighting scope for improvement. "We believe that DfID engages effectively with the bank but that it could do more to help to drive improvements in the cost-effectiveness and performance of the bank's projects," said Ward.

"This government set up the aid watchdog to scrutinise what we do and how we spend British aid money," added Mitchell. "These reports do just that, and we will now use ICAI's findings to make sure UK aid has an even greater impact around the world."

Three academics, Heather Marquette, Richard Mallett and Mick Moore, give their thoughts on the Icai report, which said Britain is failing to address corruption in the countries it gives aid to. But what do you think?